Massachusetts Sen. John Kerry announced Wednesday that he will hold Congressional hearings on May 6 on the preservation of newspapers. His primary motivation appears to be the financial woes of his hometown newspaper, the Boston Globe. Owned by the New York Times Company, the Globe is under extreme financial duress–losing $1 million per week–and is attempting to fight off closure by demanding union concessions of $20 million.
Artwork By Patrick Finney
Kerry, who is chair of the Senate Commerce Subcommittee on Communications, Technology and the Internet, wrote a public letter to the Globe expressing solidarity with the newspaper industry and a commitment “to ensuring that the vital public service newspapers does not disappear.” But while Kerry’s rhetoric is a sweeping gesture to the newspaper industry, what action his hearings will spawn is unknown.
One potential solution is The Newspaper Revitalization Act, a bill that would attempt to preserve newspapers by allowing them to operate as 501(c)(3) non-profits. Introduced by Sen. Benjamin Cardin, D-Md., the legislation has drawn both praise and derision. Its major benefit would be tax exemptions for newspapers and the ability to solicit tax-deductible contributions. However, in order to be considered a “qualified news corporation,” newspapers would have to fulfill criteria that could be problematic.
The first and most evident snag is that the bill excludes local newspapers – roundly perceived as the most sustainable – by mandating beneficiaries provide national and international coverage. The second, and more troublesome, is that according to IRS tax code, 501(c)(3)s aren’t allowed to advocate a political opinion. This means that newspapers will no longer be able to endorse politicians, and could also potentially face economic consequences if their reporting was alleged to contain advocacy. Imagine a rally by conservatives to exclude a publication that reports favorably on gay marriage, or an effort by liberals to deny non-profit status to a newspaper that gives sympathetic coverage to Second Amendment advocates.
The news world’s reaction to this potential bailout has been predictably negative. In March, while speaking at the University of Oregon, Boston Globe editor Marty Baron responded with skepticism to a question from the audience about a bailout for papers; most in media are equally apprehensive about the government taking a large role in news. New media evangelists also have harsh words for the bill, which they perceive as an attempt to rescue an industry that is unsustainable.
Daily print circulation has fallen from 62 million twenty years ago to 49 million, while online readership now accounts for approximately 3.7 billion page views per month. Massive revenue shortfalls, predominantly triggered by the loss of classified revenue to sites such as Craigslist, paint a future of attrition for the newspaper industry.
Senator Kerry’s motives are commendable, but they make the common error of conflating the issue of saving newspapers with saving journalism. Print newspapers are going to die – there’s simply no way around it. It is time to for the journalism industry to abandon nostalgia and transition fully to the digital medium.
In this effort, the government can help. After 17 quarters of steady growth, online advertising dropped in the fall of 2008 and has yet to recover. Journalism has yet to be effectively monetized on the Web, and one of the reasons is that content aggregators such as Yahoo and Google are swiping news under the protection of the legal doctrine of “fair use.” In early April, the Associated Press stated its intention to cut down on the use of its content without compensation, but it faces a tough battle against wealthy corporations and hordes of rogue bloggers.
If the AP was to lose a major “fair use” lawsuit against online content providers, it could set a disastrous precedent. Congress needs to step in as a mediator and broker a deal between the two parties that provides more compensation for online revenue. In addition, the framework of the Newspaper Revitalization Act should be altered to primarily encourage the development of digital media outlets that specialize in niche reporting. It is no longer sustainable to have general interest media, but by encouraging the development of Web sites for local and public interest reporting, foreign affairs, and a variety of niche media, it may be possible to replace much of the valuable reporting done by newspapers. Lastly, instead of being granted 501(c)(3) status, these media outlets should be able to apply for a completely separate tax exemption that has no restrictions on political content.
Yes, the road ahead for journalism is long and winding, but if the government uses a smart, flexible approach, it can assist in breathing life back into an institution America can’t afford to let die.
This editorial appeared in the Oregon Daily Emerald today.
If you didn’t post it here how would I ever read it in an Oregon paper?? Thanks for posting it, please post all your stuff so we can check it out!
Nice article, Dan. The nonprofit idea is interesting, but at its heart is completely unconstitutional in my opinion, because what we then have is the government, through the IRS, essentially “evaluating the fairness” of coverage and determining which papers stay in business and which ones don’t. To boot, the Kerry’s exclusion of the most viable niche in the industry–local papers–is idiotic.
What would seem to better accomplish the goal of helping papers survive is an industry tax break rather than nonprofit status. The idea, after all, is to help the newspapers regain profitability by letting them keep more of their own money (a very Republican idea, Senator Kerry)–not to make them charities that by virtue of an inherent conflict of interest would violate journalism’s fundamental status as the Fourth Estate.
Turning the industry into a charity case is the antithesis of “progressive.” After all, for things to be reborn, they must die first.
I’m just saying.
Yeah, I agree that having the IRS gauging the value of content could be disastrous. I think it’s another example of the government having good intentions coupled with poor policy ideas. You’re right in the fact that things must die–especially if they’ve become irrelevant, which conventional media is slowly becoming.
[…] allow newspapers to receive 501 C-3 classification and the beefy tax breaks that accompany them(see my past post on its flaws). While other congressional leaders meddled in the dialogue, the fiery discourse mostly came […]